Asset swap for UWI debt - Governments commit to clear US$200m arrears

The Vice Chancellery of the University of the West Indies (UWI) reported on Friday that governments of the region are making arrangements to settle debt owing to the institution, estimated at around US$200 million, in cash and kind.

The update follows the appointment in February of CARICOM's lead head for human resource development, Dr Timothy Harris, the prime minister of St Kitts-Nevis, to resolve the debt owed amid UWI's faltering finances.

Harris' appointment itself came alongside a paper presented by UWI Chancellor Sir George Alleyne and Vice Chancellor Sir Hillary Beckles to CARICOM Heads of Government at their inter-sessional meeting held in Haiti in February.

The paper titled 'Funding the University of the West Indies' pointed to approximately US$200 million of bad debt racked up by member states, extending back 25 years, and urged its resolution through initiatives such as the swapping of debt for physical assets; using the value of receivable as collateral for a long-term funding arrangement; and using the partial sale of receivables to private financial institutions.

Beckles also asked that PM Harris draft a plan to facilitate a reduction of the debt owed to UWI, and help to find avenues to sustainably finance the university.

The heads agreed to the suggestions at the meeting.

On Friday, Professor Densil Williams, who was tasked to work on the project by the office of the vice chancellery, told the Financial Gleaner that results so far were positive, inclusive of commitments to provide cash to the university.

Prime Minister Harris "has been remarkable in leading the conversation with his prime ministerial colleagues on this matter," said Williams, professor of international business and pro vice chancellor for Planning at UWI, Mona.

"To date, heads have agreed to payments both in cash and kind. For example, the prime minister of Trinidad & Tobago agreed to provide a working asset to the UWI as part of its settlement for the arrears. Similarly, the prime minister of Antigua & Barbuda agreed to provide assets to the UWI on a free hold basis, which the institution can add to its balance-sheet and also, use as collateral to generate capital for expansion and modernisation of the plant. Other prime ministers have also committed that, by August 2018, they will make interim payments in cash to help the UWI to deal with any cash-flow burdens."

Williams said this update was based on a Friday morning meeting with CARICOM ministers on the final day of the Conference of Heads of Government hosted by Jamaica in Montego Bay, July 4-6.

It remains unclear how much of the US$200 million debt would be cleared from all the commitments received.

"Unfortunately, I can't give an estimated figure at this point given that some of the commitments are in assets and some in cash. We will be able to provide this update maybe by September when the cash is in hand in the bursary," Williams told the Financial Gleaner.

The University of the West Indies is a regional institution financed by governments of the CARICOM bloc. The university operates campuses at Mona, Jamaica; Cave Hill, Barbados; and St Augustine, Trinidad. Jamaica is also the regional headquarters for the university.